KBRA Affirms All Ratings for UBS 2012-C1
4 Oct 2024 | New York
KBRA affirms all of its outstanding ratings for UBS 2012-C1, a $71.9 million CMBS conduit transaction. The affirmations follow a surveillance review of the transaction and are based on the performance and expected recovery of the transaction's remaining loan, Poughkeepsie Galleria, which has an increase in estimated loss since KBRA’s last ratings changes in October 2022. However, the change is not meaningful enough to warrant a change in the ratings. The details of the loan are outlined below.
Poughkeepsie Galleria (100%, K-LOC, Underperform)
- The loan is collateralized by a 691,325 sf portion of a 1.2 million sf super-regional mall located in Poughkeepsie, New York. Mall anchors currently include Dick’s Sporting Goods, Macy’s, and Target, of which only Dick’s Sporting Goods serves as collateral. Sears (non-collateral) and JCPenney (collateral) closed their respective stores in 2020. The loan sponsor is The Pyramid Companies
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on the weak collateral performance. The loan was originally transferred to the special servicer in April 2020 for imminent monetary default and subsequently failed to pay off at its November 2021 maturity date. The loan was returned from the special servicer in November 2023 after a modification was executed in July 2023. Terms of the agreement include the extension of the loan’s maturity date to January 2025, with two one-year extension options thereafter, and a reduced cash interest rate of 3.30575% and PIK interest based on a 3.30575% rate.
- The servicer-reported occupancies and DSCs are: 70.0% / 2.07x (YTD June 2024), 58.0% / 1.81x (FY 2023), 56.0% / 0.76x (FY 2022), 66.0% / 0.82x (FY 2021); at closing these were 87.0% / 1.28x.
- An appraisal dated March 2023 valued the asset at $68.0 million ($98 per sf), which is 71.3% below the $237.0 million ($343 per sf) value at issuance. As of the September 2024 remittance period, cumulative non-recoverable interest allocated to the Poughkeepsie Galleria asset totaled $8.2 million. In addition, during the September 2023 remittance period, $2.9 million in net interest shortfalls were added to the loan’s principal balance, resulting in a current trust loan balance of $74.8 million and a total outstanding loan balance of $136.0 million inclusive of a $61.2 million pari passu piece securitized in the UBSC 2011-C1 transaction, which is not rated by KBRA.
- KBRA estimates a value of $38.7 million ($56 per sf) for the loan, which considers a potential distressed liquidation of the asset. KBRA’s analysis resulted in an estimated loss of $118.9 million (87.5% estimated loss severity) on the whole loan balance of $136.0 million.
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining asset in the transaction, as well as the continuing magnitude and extent of interest shortfalls on the certificates.
Details concerning the rated classes are as follows:
- Class E has a rating of CC (sf)
- Class F has a rating of C (sf)
To access rating and relevant documents, click here.